What Can Be Divided in a Military Divorce?
Colorado courts view all marriages as partnerships and presume that the property acquired during the marriage is “marital property”. Colorado law presumes that the property acquired during the marriage should be divided fairly (“equitable distribution”) between the parties in a divorce, regardless of whose name is on the title.
But members of the U.S. military, of which there are many stationed in Colorado, frequently ask about property division in a military divorce.
Do the same laws apply to serving members of the military as to civilians and what is considered marital property?
A military marriage in Colorado that ended in 1988 set an important precedent for military property division when the Colorado Supreme Court ruled that military retirements are “property” and therefore are part of the marital estate and subject to division upon divorce, just like other pension plans.
How is military retirement divided when active service members are divorced?
Military retirement is often one of the most valuable assets in a Colorado divorce and it is no surprise that considerable attention has been paid to it in the courts over the years.
The fact that a military member can still be in active service at the time of a Colorado divorce but must consider retirement pay as marital property subject to division is a surprise to many service members.
If an active (non-retired) member of the military gets divorced here, the Frozen Benefit Rule from the 2016 National Defense Authorization Act (NDAA) is used to calculate the division of the military retirement.
The former spouse’s share of the retirement is “frozen” at the date of dissolution of the marriage. This means that any post-decree promotions or longevity increases in the retirement payments are not subject to division.
Another valid way to divide a military retirement in Colorado is for a court to calculate the Net Present Value (NPV) of the marital share and then award this to the spouse. This is more complex as it needs to take into account how long each spouse may live and involves some guesswork with future rates of inflation.
This method is seldom used in Colorado and is usually only considered for brief marriages or in those involving large marital estates, where there are sufficient other marital assets to offset the military retirement.
In some military divorces, the member and the ex-spouse calculate the present value of the military pension and reach a settlement to avoid future confusion and uncertainty.
How is military retirement divided when retired service members are divorced?
When retirement pay needs to be divided after a divorce and the service member is already retired, the court will use the Hunt/Gallo formula.
Using this formula, the marital portion of the retirement is calculated as follows:
Months of marriage overlapping service
Total months of military service at retirement
The formula applies to all defined benefit plans (e.g., FERS, PERA, or private company plans) as well as military retirements when the member is already retired at the time of divorce.
It does not apply to defined contribution retirement plans, such as IRAs, TSPs, 401(k)s, etc.
Example of the Hunt/Gallo formula:
Say that a divorcing couple was married for 10 years (120 months) overlapping the 30-year (360-month) career of a retired military member.
The marital property portion would be 120/360, or 30 percent of the service member’s disposable retired pay. In a 50/50 split, the ex-spouse would receive half of that or 15 percent of the member’s disposable retired pay.
Equitable distribution of property in a military divorce
The same equitable distribution laws apply to military divorces in Colorado as to civilian divorces.
This means that all marital property and debts must be divided fairly. That does not necessarily mean equally in a 50/50 split.
What is fair is open to negotiation and that’s why many couples hire lawyers to negotiate a settlement on their behalf so that key financial details are not missed. Generally, anything brought into the marriage (except inheritance and gifts from anyone but a spouse) is considered separate property and not subject to division but this is an area of frequent dispute between couples.
Each party must submit a Sworn Financial Statement disclosing all their assets to the other spouse and the court will issue a temporary order restraining either party from disposing of any property before the divorce decree is issued.
Generally speaking, the Colorado courts prefer that the parties in a divorce work together to determine a split of the marital assets and debts that is fair and equitable to both parties. However, sometimes it is not possible for the parties to reach a settlement, and in that case it is important to seek legal representation from an experienced divorce attorney who can help you prepare for a contested permanent orders hearing where the Judge will divide the marital assets and debts.
What is the USFS Protection Act?
The Uniformed Service Former Spouses’ Protection Act (USFSPA) was passed by Congress in 1982. It provided ex-spouses of U.S. military members with a share of the member’s retirement pay.
The aforementioned National Defense Authorization Act added to the legislation, changing the way military retirement pay was divided by freezing it at the time of divorce.
What is the 10/10 Rule?
If a marriage lasted at least 10 years during the time that the military member was in service AND the member was in service for at least 10 years, the former spouse’s share of the military pension will be automatically paid to the former spouse by the Defense Finance and Accounting Service (DFAS) rather than the spouse having to pay his or her ex with a check.
This is sometimes known as the “10/10 rule”.
All divorces have the potential to become complex. Military retirements certainly complicate property division in a military divorce.
If you are having problems, speak to a divorce attorney at the Colorado Legal Group for a free case evaluation. Call 720.594.7360.